Spectrum disappoints, but stock soars

LOS ANGELES (MarketWatch) -- Spectrum Brands Inc. reported earnings Thursday that came in well below analyst expectations, but the consumer products maker's stock soared by more than 25% at one point as investors seemed to conclude the company could survive its current troubles.

Atlanta-based Spectrum
SPC, -1.15%
reported net income of $2.5 million, or 5 cents a share, on sales of $698.3 million. A year ago, the company's income was $23.7 million, or 48 cents a share, on sales of $707.8 million.

The maker of Rayovac batteries and Remington shavers said without one-time charges, the company would have reported earnings of 22 cents a share. A year ago, earnings would have been 70 cents a share without one-time charges.

The company was expected to earn 29 cents a share, according to a poll of analysts from Thomson First Call.

Analysts were generally disappointed by the news, but concluded that concerns Spectrum eventually would have to file for bankruptcy were allayed, at least for the time being. That accounted for the strong stock move, up 16% in recent action.

"This could be short covering," said Jason Gere of A.G. Edwards & Sons. "I think the stock may hold up at this level."

Spectrum said in a press release that it was working cut costs and reducing debt. The company also said federal prosecutors have terminated their probe on Spectrum results for the third and fourth quarters of 2005.

"My best guess is investors realized they're not going out of business," said William Chappell of Suntrust Robinson Humphrey.

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